Making the Most of the Latest PPP — Sustaining your Business
- All right. Welcome everyone to the Maryland Business Rebooted webinar. This program was created in the summer of 2020 by the Robert H. Smith School of Business Faculty members at the University of Maryland, Michelle Wedel and Judy Frels and Chris Thompson with the goal of helping small to midsize Maryland business owners navigate the impact of COVID-19. Today's webinars is a pretty special one because it is the last one of our 2021 series of the Maryland Business Rebooted program. We have amazing resources and incredibly helpful recordings of our webinars on our website.
So we encourage all of our audience to utilize this website to navigate the ongoing impacts of the pandemic. My name is Nicole Kim and I'm a Coordinator for the program. And today I'm very excited to moderate a really special panel discussion with three experts to discuss the Paycheck Protection Program otherwise referred to as the PPP, which has impacted so many small to mid-sized businesses around the country. So for today's webinars, the first hour where our panelists will discuss the PPP and its specifics will be recorded for you to watch again on our website.
But we also realize that our audience today may have a lot of questions that may be sensitive and specific to each business. So we open up the floor to Q&A's for the audience towards the later half of our webinar. And we'll stop recording at that time to preserve your privacy. And we hope that today's webinars can be a safe place where you can get the information you need for PPP to help your business.
So please submit any questions you have for our panelists anytime throughout the webinar through the Q&A section or the chat function and I'll deliver those questions to our panelists. So welcome today, Mike Mindy and Rony who I believe is still kind of in the process of joining the webinar. It's a great pleasure to have you with us today and thank you so much for your valuable time and your expertise on the Paycheck Protection Program with us. So before we start, we'd like to know a little bit about our audience so that our panelists have also a sense of kind of who they're speaking to and how much in-depth they should go into for PPP and our audience's experience with PPP. So let me launch a poll now so that we can kind of get an understanding of where the audience is coming from. Right, so kind of half of our participants have already voted and it's coming in.
And in the meantime, let me just kind of walk us through the structure for our webinar today. So since we have a lot to unpack today, I thought that we would first kind of start off with each of our panelists sharing their own experience and knowledge about PPP. So let's say maybe 10 minutes for each panelist to share their expertise. So I'll introduce each person maybe I'll go first, Mike and then Mindy and then to Rony.
And so let's kind of just have that in mind. So let's take the first, maybe 30 minutes or so to hear from each of our panelists on their expertise. And then I have some questions prepared to kind of facilitate more of a discussion today. So after those overviews, I'll go to go ahead and kind of ask those questions to facilitate discussion. And then after that, I'll open up the floor to any of the questions that we might get from our audience.
All right. So at this point, let me just end the poll and share the results with you. So we have a sense of where our audience is. So it seems like, are you able to see the results, Mindy and Mike? Okay, cool. So it seems that the majority of our audience today is a business owner, which is great. That's our audience that we're catering towards, the industry that they belong to.
A lot of them said services, 60% or so and then other audiences are also in the retail trade, finance insurance, real estate, public administration, transportation. So this is great. How many employees do you have? A lot of them are saying less than 10. So we are catering to this kind of very small business owners in this audience today.
There are a couple that have maybe 50 to a hundred employees and more than 250. And then we also see that maybe 30, close to 30% of our audiences have already applied for a PPP loan, which is great, good for everybody but 70% or so have not yet done that. So I'm sure everybody's here today to learn about how they can apply for this PPP loan and then 10% or so of our audience is saying that they did receive a PPP loan already.
And then lastly, people are curious, 70% or so are interested in the first draw applications. And then the rest are interested in the second draw forgiveness applications and kind of other more details related to the PPP. So I think this gives us a really good sense of kind of who our audience is and I hope that that helps our panels to kind of orient yourselves on who you're and where like how far you should go. All right. So let me close the poll and okay.
So Mike, so if I might introduce our very own Michael Faulkender. Mike is a Professor of Finance at the Robert H. Smith School of Business and he conducts research regarding financial economics and public policy, which has been published in numerous prestigious academic journals. But most importantly for today, he also served as the Chief Economist and Assistant Secretary for Economic Policy at the U.S. Department of Treasury from 2019 to 2021. And in that role, he advised his secretary on domestic and international issues that impacted the economy.
And during the COVID-19 pandemic he assisted in negotiating the CARES Act and was the senior treasury official who led the implementation of the Paycheck Protection Program. So we're really getting a chance to hear straight from the architect of PPP. So Mike, the floor is yours.
If you have anything to share go ahead and share your screen. - Great, so thank you, Nicole, for that introduction. And yeah, it's my pleasure to be part of this panel today and help people who are still asking questions about Paycheck Protection Program loans, so that they can get those answers prior to the conclusion of the program at the end of this month. I always start any discussion I have with PPP just reminding people of what the situation was like when the pandemic begin and put it in context. So what I've got on my screen right now is unemployment claims to give you a comparison of how large the impact of the pandemic was on the economy relative to the financial crisis. And so the gray box you've got in the 2008 to 2009 period is how many people were applying for first time unemployment claims during the financial crisis.
And then you can compare that to the yellow box which is the unemployment claims filing during the pandemic. And so at its peak, we were seeing 10 times the number of people applying for weekly on a first time unemployment claims at the beginning of the pandemic. Then during any week that we saw during the financial crisis.
And so the objective of Congress and the Administration at the time was to very quickly rollout relief. And at the center of the CARES Act was helping small businesses keep their employees on payroll and ensure that households had the liquidity that they needed to withstand the pandemic and comply with stay-at-home orders. And so the CARES Act that was passed on and signed into law on March 27th had largely six components to it.
The Paycheck Protection Program that we're gonna talk about today but there were also the Economic Impact Payments which were the direct payments to households. There were Enhanced Unemployment Benefits, so for those who found themselves unemployed there was the weekly $600 supplement to the normal unemployment insurance benefits that are available through state agencies. There was also a Payroll Support Program for Airlines and national security firms that was separate from PPP. There were the Federal Reserve what we call 13 three facilities. So these are the different lending facilities that the Federal Reserve implemented.
And there was an equity infusion provided by treasury that was funded by the CARES Act that facilitated those. And then finally there was direct Aid to States, municipalities and tribes to help them with some of their expenses. And so there were, the secretary had a number of working groups and he asked me to take the lead on the implementation of the Paycheck Protection Program. So let me spend a little bit of time since most of you have not yet applied and are interested in first-time loans. Let me just give you a very broad overview of how the program works.
So the Paycheck Protection Program offers forgivable loans so the borrower takes out a loan and then provided that the funds are used for eligible expenses during the covered period. And I'll define both of those in a moment, the loan can be partially and in most cases fully forgiven and so small businesses and sole proprietors as well as independent contractors would work with anyone of more than 5,400 participating lenders to obtain a PPP loan. And then as I said, after they use the money they can apply for full or partial forgiveness and explain how the funds were used. So who's eligible for a PPP loan. Well, for a first draw PPP loan, it's businesses with fewer than 500 employees.
And we're in operation on February 15th, 2020 who can certify that the current economic uncertainty makes the loan requests necessary to support the ongoing operations of the Applicant, right? So there's a self-certification that firms have to designate that they were impacted by the pandemic. And so, there was a great deal of coverage of how we enforced that. And that's, this came into a lot of focus when for instance, Shake Shack got a loan and the Lakers got a loan. And so there's some work.
I don't think that it impacts people that are on this webinar but those are some of the major eligibility criteria. There are some other small ones, so you can't have defaulted on money that was owed to the government. You can't have committed a financial felony within the last five years. So there are some others that again are very minor but these are the primary eligibility criteria for first draw loans. The loan amount is equal to two and a half times the average monthly payroll of the applicant. So you can take that average for calendar year 2019 or for calendar year 2020.
So take that annual amount divided by 12, that's your monthly payroll, multiply that by two and a half. And that's the maximum loan amount for first draw loan. On the front end, so when you originally borrowed the money from your lender, the lender will ask for documentation so that they can validate your monthly payroll expenses.
So this could take the form of tax filings. You can take the form of a payroll report, if you use any kind of third-party payroll provider or it could be through the provision of financial statements. I think that some kind of documentation to demonstrate that what the amount of monthly payroll. The Biden Administration has announced that they are going to potentially change the way that monthly payroll has been defined.
I looked on the website again today. I've seen them make the announcement that they're going to do that but I haven't yet seen the update to the rules. And my understanding is that it's going to potentially add to what can be included. So potentially make the loan amounts even more generous for independent contractors and self proprietors. Okay? So then once you get your loan, you then can use it for up to 24 weeks. So from the moment you receive the money from your lender until a maximum of 24 weeks, that's called your covered period.
So anywhere from eight to 24 weeks at the discretion of the borrower is the length of the covered period. And the money can be used for and be forgiven if they're used for any of these eight things. So primarily payroll costs, this is salaries, wages, bonuses, tips but it's also health insurance, retirement benefits. Just your standard expenses that go towards payroll compensation or employee compensation package. In addition, it can be for mortgage interest on pre-existing loans. It can be for rent or for lease payments, can go towards utilities.
There are certain Hubbard operations expenses that are and there's a very specific definitions of those within the statute. And then there are explanations of those on the forgiveness application as to what is covered. For businesses that suffered any property damage during the any of the writing or looting last summer, those are eligible expenses. There are certain supplier costs. Again, these are explicitly defined on the forgiveness application. And then if there was money spent on worker protective equipment, personal protective equipment to facilitate compliance with health orders, those all of eligible expenses.
Now, in addition, at least 60% of the forgiven amount must have been used for payroll. So you can use the money on any of these eight things but at least 60% of your forgiveness amount needs to have gone to payroll, right? So you got a $10,000 loan, at least 6,000 of it needs to go to payroll if you want the full 10,000 forgiven. Let's say you spent only, 5,000 of that on payroll, you would divide 5,000 by 60% to get your maximum eligible forgiveness amount.
So if there is still a partial forgiveness available if you don't use all of the amount of the loan or if you don't use at least 60% of it on payroll during the covered period. There are three different ways to apply for forgiveness. Almost everybody in this webinar is gonna be in the first bucket because given the size of your organizations, the number of employees you have almost all of you are gonna have loans with less than $150,000. And for those loans, there is a one page form where the borrower certifies that they have complied with the programs requirements. There's no other than the forgiveness form itself there's no additional documentation that's required to be submitted to your lender at the time of the forgiveness application. There will be a random sample of those 3508-S borrowers whose loans will be audited to ensure that compliance took place.
So much like there's a small percentage of those who file tax returns with the IRS. They get audited, there's a similar audit procedure to randomly select a borrower's forgiveness applications to ensure compliance but almost all of the those who use the 3508-S, they don't have to submit any documentation. For loans over 150,000 that satisfied certain criteria, so they didn't cut hours or they didn't cut salaries, or they were eligible for one of the safe harbor provisions, they can use the 3508-EZ. So this is, it's more like a two page form where they have to separately list the different amounts that were spent on each of those eight components. And they do still have to submit documentation to show how that money was used.
So that could be receipts, it could be payroll records, again, some kind of their examples of what the appropriate documentation is accompanying the forgiveness application instructions. And then finally, there's what I call the long form which is the standard 3508-S, excuse me, the standard 3508 form, that's for, again, loans over 150 through either a cut their number of workers, they reduced salaries or wages and were not eligible well for one of the safe harbor. So again, almost nobody on this on this webinar is gonna have to fill out the long form 3508, but that is what's there for the more complex businesses and months. In addition into the first draw loans which is all that was out there through August in the most recent legislation enacted at the end of December and signed by the President on the 27th of December, there are the second draw loans and these were rolled out in January.
So second draw loans are for those businesses that have fully use their first draw loan amount and also satisfy certain additional criteria. So they're more selective eligibility criteria for second draw loan. These are borrowers with fewer 300 employees rather than the previous 500. And they have to be able to document that they had at least a 25% revenue reduction in at least one quarter in 2020 relative to that same quarter in 2019 in those cases.
So they have to demonstrate that they were particularly hard hit by the pandemic and there are a variety of ways that they can provide that documentation. In addition, I didn't see very many restaurants or hotel borrowers that were in this webinar, but those segments were allowed to have three and a half times the monthly payroll amount instead of two and a half times. So there's a small subgroup of potential borrowers that were able to get slightly larger loan amounts considering some of their greater expenses and impact from the pandemic. So that's my overview for now and then I'm happy to take the questions that are coming. - Definitely, thank you so much, Mike.
I'm thinking let's first go through what Mindy is gonna share with us and then also hear from Rony and then I'll deliver all the questions that we've been getting from our audience which is a lot of questions, which is great. So Mindy, hi, let me introduce Mindy to everybody. Mindy Lehman is the Senior Vice President of Government Relations and Communications at Maryland Bankers Association. And in her role, Mindy has a primary responsibility for leading governmental affairs of the association and serving as an advocate for the industry at all levels of Maryland Government. Mindy is also leading the efforts on COVID-19 related initiatives on various topics, including the PPP.
Mindy has partnered and collaborated with the SBA which is the Small Business Association Treasury, National Banking Associations, NBA member banks and Maryland Business Groups, including the Maryland Chamber of Commerce, National Federation of Independent Business to help Maryland banks and small businesses they appraised in the PPP program. So I'm really excited to hear from Mindy. So Mindy, go ahead.
- Well, thank you, Nicole. And I just wanna thank you for the opportunity to be here with you today. This is such an exciting program that the University of Maryland has launched.
I think it's a wonderful resource for businesses. Just to give you a little bit more flavor about the Maryland Bankers Association and who our members are. We represent the traditional banks.
So it's the institutions that you're very familiar with. They have branches in your communities from the very large institutions, such as JPMorgan Chase and Bank of America to the more regionals including M&T Bank, PNC Bank, for example to smaller community banks, such as the Harbor Bank of Maryland, which Rony is with. And I'm so pleased, one of our attendees is with the People's bank. That's one of the Maryland Bankers Association members. So our members were really the tip of the spear with the PPP program and just seeing the dedication of our bankers and Maryland banks was really quite impressive during the entire program. As Mike referred to, it's a remarkable program in terms of the short ramp up time and how much funding was pushed out the door and the need was so intense.
So I believe it equates to about 30 years of lending by the SBA that was accomplished in about three months and banks were on the ground implementing that working hand in hand with their small business customers. And it just to give you a little bit of a flavor of the type of dedication that I saw from our members it was not unusual, especially during the very beginning parts of this program for me to get a phone call from a bank president or CEO who was still in their office at eight, nine, 10 o'clock at night and they were manually uploading a customer's PPP loan application. And that was during the day where each bank could only have one or two users. And the PPP program is incredibly important but as Mike was referring to, it's not the only resource out there.
So banks were also on the ground making sure that those stimulus payments were received to people's bank accounts as seamlessly and as easily as possible. So really Maryland Banks take very seriously their role as an economic first responder during this pandemic. And that commitment is it remains today. And just to give you a flavor of the impact of just the PPP program in Maryland during that first round of funding, which wrapped up in in August of this year, which was initiated you back in 2020 and wrapped up, the PP loans in Maryland, there were 86,000 loans totaling $10 billion and that supported almost a million jobs throughout the State of Maryland and Maryland banks were deployed about 90% of those loans and really the commitment to the program hasn't lessened at all. So we are now in that second round of the PPP funding and to-date there have been about 35,000 loans for over $2 billion. And so I guess one of the messages I really want to relate to the audiences is first to compliment you on being here with us today, I've also been so impressed by just the resilience and perseverance and determination of Maryland small businesses.
And I think being with us today and continuing to research your opportunities, it's just a pretty amazing example of that. And I wanna reassure you that there remains plenty of funding in the PPP program. There is I believe a hundred billion dollars left in the program.
So whether you're in the bucket of, you're just now learning about the program or haven't applied earlier or whatever that reason might be. There is still plenty of funding and time left to reach out to a lender and secure a PPP loan. If you're in that second bucket of you've already obtained a PPP loan, there's also, as Mike said, funding left and an opportunity for a second draw or a second PPP loan, if you need that. And then if you're sort of through the process, just to be aware that the next step will be applying for that loan forgiveness.
These are intended to be forgivable loans but you will have to apply for that so just to be aware of it. And something that the Maryland Bankers Association is engaged with in this sort of final push before the program concludes at the end of March is we've partnered with the American Bankers Association and we just launched it this week. And it's a media campaign.
It's a media advertising campaign and we're targeting underserved areas with the objective of reaching businesses who have not yet, your eligible but have not yet availed themselves of the PPP loan program. So maybe some of the folks in this meeting today have heard this advertisements. They're being launched in both the DC and the Baltimore market area. And one of the things that the advertisement will or the outreach it includes in their messaging is if you're interested in a PPP loan, contact your bank and if you don't have a bank now, here's a resource for you.
It's aba.com/paycheck that's aba.com/paycheck and that will help you locate a local PPP lender to get this process started. I also wanted to thank, Nicole, thank you so much for that very kind introduction. I think you did a wonderful job at sort of highlighting our partners as we move on through this.
And one of the things that the NBA did in our role as a trade association on the ground is we work very closely hand in hand with our members. And as this program has evolved as we identified different pinch points and different delays in the process we've been able to fast track those issues with both the treasury and the SBA with that overall objective of getting it to work smoother, faster and making sure these resources are getting to the hands of the small businesses that need them so much during this time. I also wanted to thank Senator Van Hollen. U.S. Senator Van Hollen and Ben Cardin.
They were really instrumental in the congressional actions that resulted in the PPP program and the change of sense. I definitely wanted to recognize our leadership in this space. We've worked with a number of Maryland small businesses throughout this and I'd also wanted to give a quick shout out to Ruby Daniels, which she is the President of the State Family Child Care Association.
And she reached out to me some time ago because her members were struggling a little bit, due to unique business model with providing childcare out of their homes and not necessarily having employees. And I think University of Maryland providing this type of a venue for businesses such as, child care providers and others to help get their questions answers. It's a really wonderful opportunity. So I'm happy to answer questions and those are my comments. - Thank you so much for your really really incredible insight Mindy.
And so let me just move on to Rony just for the sake of time. I know that we have a bunch of questions that are coming in so I wanna be able to kind of get through all of those. And so unfortunately Rony is not able to share her video but she is here with us. So she's our third panelist.
And she's calling in on her phone due to the kind of unique situations that COVID and the pandemic has put us and her internet is kind of not working that's well, but she's here. So Rony Brodsky is the Director of Strategy and Impact Investing at the Harbor Bank Shares Corporation which includes the Harbor Bank of Maryland and SBA Lender and Community Development Financial Institution. And in her role at the Harbor, Rony supports the mission-driven provision of capital paired with technical assistance and best practice analytics to organizations, businesses and startups.
So I'm really excited to hear from Rony. Rony, are you with us? - [Rony] I am. I am, Nicole.
Thank you so much. Can you hear me all right? - [Nicole] Yes, go ahead. - [Rony] Great, well, thank you all for having me. It's a privilege and I really appreciate folks who tuning in right now, during what is a really difficult period and working at a community bank. We really see firsthand, how resilient to Mindy's point businesses are, and we really share their struggles and are really privileged to to support them through the pandemic. As Nicole mentioned, my name is Rony Brodsky, Director of Strategy and Impact Investing at the Harbor Bank Shares Corporation.
The Harbor Bank Shares Corporation comprises three of Maryland's 14 community development financial institutions. Our core institution is the Harbor Bank of Maryland which has been around for about 40 years, is headquartered in Baltimore and is the only African-American minority owned depository institution headquartered in the State of Maryland. In addition to doing PPP lending, we also do SBA 7a lending and all matter of capital provision across our subsidiaries.
I mentioned and emphasize that we are community development financial institutions and minority depository institutions because CDFIs for short and MDI for short, have a dramatically proven track record of providing outsized capital namely lending to small businesses and startups low-income and minority communities. And they've really taken an important role here during this PPP, actually, during both PPP periods. We're proud to have won the U.S. Treasury's Bank Enterprise Award 13 times for increased investment in low-income communities.
And of relevance potentially to audience members here and affiliate of ours under the Harbor Bank Shares Corporation is the Harbor Bank of Maryland Community Development Corporation whose focus is to pair capital provision with technical assistance to really help folks get across the finish line and to become credit worthy conventionally. We have several accelerator programs including ones focused on a real estate development. And we have a 6,000 square foot co-working space where we provide technical assistance and speaker series events for folks. I'll note that I am not specifically a loan officer but I work very close with loan officers and serve on the Harbor Bank of Maryland Loan Committee. And so bring that perspective here and on the ground perspective, if you will.
If I can not answer questions, any questions on this call, I welcome you all to email us @sba like the Small Business Administration @theharborbank.com and we'll provide that email address afterwards. So I wanna emphasize a few takeaways that I hope everybody will take away from this call. I'll share them in some level of detail here and we'll be happy to follow up with some depth later. So first of all, if you are and we see that many audience members here are interested in getting a PPP loan first or second draw and you believe that you're eligible, do not delay. It's really important right now not to delay.
And to clarify the March 31st deadline is the deadline, not for you to submit your application to a qualified lender but the deadline for qualified lenders to submit your application to the Small Business Administration and lenders will not submit applications whose numbers they don't believe in. And so often what it takes is some amount of back and forth between you and a qualified lender before your application is ready for submission. So really try to get ahead of the game here and if possible, move as soon as possible.
It's also important to note and to emphasize the 14-day exclusivity period which we're in right now, that is for small businesses with 20 employees or fewer that expires on March 9th. Great if you can get in before then, you were certainly at able to apply any time after that until March 31st but the exclusivity period is important because it helps to privilege small businesses right now and helps to really dedicate resources to them both from a lender's time standpoint and from a actual loan capital standpoint. The second point of emphasis and takeaway that I want folks to have here is really stay up to date on the SBA and Treasury's Official Government Guidance. This discussion here is what we hope will be a really strong compliment but not a substitute for government guidance. As Mike noted, we are anticipating a number of updates to rules and guidance, especially with regards to sole proprietors and independent contractors. In fact, I heard from the SBA today that perhaps even by the end of this session they will have a release additional guidance on updated rules for sole proprietors.
So really make sure to stay up-to-date on the SBA and the Treasury websites. I'm wanna give a shout out also to the webinars series that the SBA has going on right now and that will provide a link too but they do focus on small businesses as well and might provide some complimentary tips there. Although we have a lot of really dedicated lenders here and I can really attest to what Mindy said with our teams here are working 24/7 really kind of clocking out at 10, 11, 12:00 PM during this period. We are working our best to support folks and to provide any handholding support that is needed to get their applications across the finish line. There's really a huge amount of volume right now.
So folks who come prepared, read the government resources, do their homework are gonna be best set up to succeed and don't be discouraged. There's a lot of good guidance out there. You can do it.
We've dealt with a lot of businesses that, it's a lot to be a startup right now or to be a small business owner. It's a stressful time right now but there's a lot of good support out there. I really encourage you to not be discouraged and to get on it as quickly as possible.
The third point of emphasis is that tolerability has expanded. So if you were not qualified for a number of reasons last round I really encourage you to redesign whether you can be eligible right now, specifically there were disqualifiers relating to student loan delinquency, and two, a history of non fraud felony convictions. Those have now been significantly loosened and really allow a broader population to apply for this important opportunity, again, including returning citizens.
So those are the big takeaways. I'll do a quick overview of them but I also have a number of frequently encountered tips for second round borrowers, which represent a minority but important segment of our audience here. Number one, it's really helpful to use the same lender as in your first draw. It may prevent any delays. So if you had an okay experience with your first PPP lender I encourage you to go with them again. Number two, consistency is really key.
Make sure that in your second draw application all of your information is consistent with your first draw application to the extent that it's appropriate and correct, for example, make sure that your address is spelled out identically. We do encounter a significant amount of second draw borrowers who get delayed because of small inconsistencies in their applications. And third, don't leave money on the table.
So there are a number of tips for not leaving money on the table. One, for sole proprietors who are doing second draw applications right now, as I've noted previously there might be the ability to access a loan increase with given the updated rules that are coming out right now. So look into that.
Number two, for second draw borrowers, there are a number of ways that you can calculate your loan request amount depending on 2019 or 2020 numbers. And so work with your lender to find a calculation that is best for you. Don't really leave money on the table there.
So I'll pause there, but again, my points of emphasis are don't delay, stay up-to-date on the governmentguidance.gov website. Don't rule yourself out. Don't be discouraged.
Eligibility has expanded and try to stay consistent, work with your existing lender if possible, if you've had an okay experience with them and keep your application information consistent. Thanks so much. And I look forward to this discussion and look forward to potentially connecting with folks offline as well. - Thank you so much, Rony. That was a terrific introduction and also kind of a good segue to get really into kind of dive into our questions that we have for today.
And I know that we have a lot of participants asking questions about their specific situations but before we get to that, I did wanna kind of get on some of our panelists thoughts on if there's any tips for everybody seems or most people in our audience today seems to be pretty interested in this first draw applications. So I know that this first time can be a little bit daunting for people to apply for this PPP loan. So if you can give any like tips or walk us through a little bit of how that process might look like I know that Rony already gave us a really good kind of a first step into that. But Mike, did you wanna kind of speak a little bit about that? - Great, so one of the resources that we have available and we'll be providing at the end of this webinar is a link to how to calculate your first loan amount to depending upon the organizational structure you have, again, are you in sole proprietor? Are you part of a partnership? Are you incorporated? What forms you should use and what numbers off of those forms you should plug in to figure out your eligible payroll amount? So what things do you include? What things do you exclude? There's step-by-step instructions on how to get those loan amounts and we've got links to those. So I definitely encourage you to find the question that corresponds to the way that your business is structured and find that the necessary documentation you're gonna need in order to have a pretty quick experience with your lender rather than kind of the back and forth that Ronny was talking about. So the more that you've found the documentation you need and done some of those preliminary calculations, then you're gonna be in a better position to expedite getting that loan approved by the March 31st timeframe.
They changed for independent contractors and sole proprietors not be eligible for quite a lot because of certain things you don't include. And so, the Biden Administration has announced that they're going to increase the eligibility amount or independent contractors and sole proprietors. And as Rony said, we're eagerly awaiting to see how those changes are going to be implemented and it could be as early as within the hour. - Amazing. So I think that's really great news for people who are trying to apply for loans right now. And maybe I'll just ask this one other kind of more general question before we really dive into the audiences specific questions.
And that is kind of overall, how do you think this program has been working so far? And if there is an advantage to the program that you think maybe the audience doesn't really know or maybe they're not aware of yet but might really benefit from learning that kind of one kind of tip or something that people might want to know. Would you like to share a little bit if you have something like that to share? - Well, I'd like to just jump in in terms of impact. I think at a couple of anecdotal stories that I'd like to share from two of my member banks, if I could just read them, I asked if they had a story they could share about a customer they helped with a PPP loan just to get a better sense of the type of impact. And I'll just share the story which was a landscaping client reached out to say that they were in desperate need of PPP funds to maintain their staff. Remember this happened at the end of March the start of the spring season, and our client had ramped up staffing and payroll to meet client expectations. Our clients started the application process on May 1st, 2020.
Although the PPP program guidelines parameters were changing almost daily and we had a request clarifying information multiple times along the way, we were able to fund the client's business account at the bank on April 17th, providing over $500,000 of PPP funding that supported payroll for more than 60 employees. On the funding date, I received a message of thanks. And this is what I really wanted to share, which read in part, "I truly don't know how to thank you. Words cannot express my gratitude and the gratitude of all my employees to a banker or anyone else for that matter, those are words that will remain for me remain with me for the rest of my life." So I just wanted to share that because I think it provides just a nice example of the rooming to the impact to small businesses. And I've also heard from members in working with their small businesses and the business owners themselves, how important this program was to them because it enabled them to keep their employees on the payroll.
And they specifically, for an example was a small business with just eight employees but they said this program helped us fund and keep on the payroll eight different families in my local area. So I just wanted to share those in terms of some anecdotes in terms of, for the impact on specific Maryland businesses. And I know, Rony, I'm sure has some wonderful examples as well. - [Rony] Yeah, I'm happy to chime in. Thanks Mindy. I would say, I mean, we've funded many hundreds of PPP loans right now that have been keeping businesses alive.
And although there are some dramatic anecdotes of large businesses or medium sized businesses that have been able to maintain employment we've also been funding a lot of various small businesses, our PPP loans have been as small as I think a $2,000 and even less. And so really I would, there's not a business or an individual who is eligible, who's too small. I would say we've funded numerous nonprofit organizations, houses of worship that provide a lot of social services and they've been able to keep their doors open and to continue providing social services to community. To Nicole's broader questions, I would also note as far as some impacts or contexts that may be taken for granted there is not so much to lose.
I've encountered a lot of businesses especially businesses that are more startups or quite small that have been a little afraid to apply for this, afraid of penalties. I do want to emphasize that there are no prepayment penalties. So even if you end up not being able to spend the PPP loan on eligible forgivable expenses which I think is relatively unlikely even if you can't spend it on eligible expenses. In the worst case scenario, you'll have a very low interest loan, 1% which is not something that you can get on the open market outside of this program, typically speaking and there's zero prepayment penalties. So I just wanna emphasize, go for it. Don't be discouraged.
And there is, so long as you're reporting honestly and are properly representing that you are eligible for the loan. There is not much to lose in my opinion. - [Nicole] Great. - Yeah, so just to give you my kind of macro view on the success of the program, across the nation, our estimates that the data that's reported suggests that more than 51 million employees were supported through Paycheck Protection Program loans. There were 5.2 million small businesses that receive them. 75% of those loans went to borrowers with fewer than 10 employees.
So the reach was significant geographically. Our estimates are that more than 80% of small business payroll was covered and it was pretty uniformly distributed across all 50 States. So I couldn't be more pleased with the uptake in the program. In fact, as Mindy said, not only did we do overall, we did about 30 years worth of SBA lending, but in the first two weeks alone we did 14 years worth of SBA lending.
So 14 years of loans in 14 days. And that was at the height of when literally millions and millions of Americans were filing for unemployment claims. And we were able to mitigate quite a lot of the pressure on state unemployment systems that just weren't designed to process that many unemployment claims at a time. And so the fact that we were able to relieve the burden on the systems that just weren't scaled to handle the kind of impact that the pandemic was having on our economy and very, very quickly get funding out again, in a geographically dispersed way.
Our estimates are that literally tens of millions of jobs were saved as a result of that. That those people would have ended up on unemployment insurance instead of staying with their employer. So we were able to turn around the job situation nationally very quickly while everybody expected that the unemployment rate was gonna rise in May, it actually declined.
And we think that the PPP is deserves quite a lot of the credit or the speed with which we were able to turn that around. We didn't see anywhere near the declines in economic activity that we think we otherwise would have had. And we think that businesses and employees are gonna be much stronger because they were able to stay attached and that we're gonna rebound much quicker than we would have had those employees and displaced. So I think it's been an extraordinary success keeping people attached, keeping them solvent during a very difficult time and really sets the groundwork so that once the nation's fully vaccinated we can get back to the full employment extremely quickly. - Thank you so much, Mike.
It's truly astonishing how much impact on this program has had. And as Rony was saying, and maybe echoed by Mike it seems that this program really is something that a lot of our audience who does have small numbers of employees that they're employing can really take advantage of. And it seems there's really isn't that much to be like scared of and so we really encourage people to kind of get in touch with their banks and I will get to everybody's questions now. So I'm gonna stop recording-- - Nicole, can I just correct one thing.
It's not just banks. While banks did a significant portion of it, there was also enormous efforts to bring in credit unions, foreign credit institutions and non-bank lenders because it was very important at Treasury and at the SBA that we expand access to this program as much as possible. So it very much did as much as I'm very appreciative of the traditional banks. We made great strides to bring in CDFI, like Harbor bank but also non-bank lenders in order to maximize access to this program. - Yes, thank you so much-- - [Rony] I'll add one additional point to Mike's important comments. FinTech have played an important role here.
And the Harbor Bank of Maryland, our affiliate community, one of our affiliates partnered with Square, Kabbage and PayPal to provide access to FinTech which have been able to do a tremendous amount of PPP lending as well. So I do definitely wanna give a shout out to them and it's definitely an avenue to go as well. - Thank you so much to our panelists, Mindy, Mike and Rony for your very, very insightful. All of these questions were really important to all of our attendees.
And so I'm sure they're really grateful for your own answers. And please refer to the different links that we mentioned throughout the discussion today. And I'll also share these really helpful links again in the chat right now. So please visit these links. If you need more information about how to apply for PPP loan how to apply for forgiveness, et cetera.
And thank you again, everybody for joining us today for the Maryland Rebooted, this is Rebooted webinar. This is our last one, as I mentioned before and this really concludes our 2021 series of this program. So we're really grateful that in the past year we were able to launch 16 free webinars on different topics including things like strategy, marketing, retailing and panel discussions on all these different important topics including the PPP today.
We'd like to conclude by thanking all of our participants, the Robert H. Smith School of Business and the University of Maryland for your continued support for our program. We're very glad that so many Maryland residents were able to attend our webinars and we sincerely hope that our resources can help guide your future success and navigation through this pandemic situation.
So thank you again, everybody. If you have any other questions, please feel free to reach out to our Maryland Business Rebooted email or to Rony, who's volunteered to share her email and thank you so much everyone for attending and hopefully this was really helpful. Thank you everyone. And thank you to our panelists so much for your time and for your expertise.